Friday, November 21, 2014

India and the internet

Recently,
I participated in a group tour to one of India's most inaccessible
and remote corners, where even road connections are extremely poor.
I found this travel a real tough job, as we had to cross hundreds of
kilometers every day in a car with poor infrastructure available, bad
roads and places of stay of reasonable quality far flung and remote.
Whenever we had reached any new town, invariably the first discussion
amongst our group would always be whether we got mobile coverage on
our phones and if so, was there 3G coverage too? Let me explain.
Like many other countries, India's mobile telephony sector is
fiercely competitive. Entire country has been divided in 18 mobile
telecom circles and telco companies have to bid for spectrum for each
and every circle separately. This leads to a situation where the
services of one particular mobile service provider may not be
available in all circles. For example, the service provider, who
provides service in my home state does not have a network in all
other states or circles. Telcos usually overcome this lacuna by
signing agreements with other service providers so to have a seamless
mobile coverage.

For
phone calls and messages, this arrangement works fine, but when it
comes to internet coverage, the tie ups do not work so well and work
out to be expensive. In addition, the problems gets augmented in
remote or border areas, where because of low traffic, these areas
make themselves less attractive to private sector telcos and are
reluctant to spread their networks in such areas. For a smartphone
user, this creates a real obstacle in accessing internet because in
certain areas, phones and messages may be available but 2G or 3 G
coverage, essential for internet connectivity, may not be there and
his smartphone would have no use. With the only exception of
Government run service provider BSNL, this holds true for all other
private service providers.

Growth
of mobile telephony in India has now become an old story. Today,
there are are more than 800 million mobile users in India, which
means that out of every three Indians, two are mobile users. What is
interesting to note is that half of new phones sold in Indian market
are actually smartphones. This aspect needs to be noted when we talk
about development of internet in India.

The
internet, which was first introduced to US consumers sometime in late
eighty’s or early ninety’s, essentially grew on back of strong
growth in sales of personal computers and then laptops. Compared to
US, sales of PC's and laptops in India not only remain smaller but
are actually declining. It is very clear that sales of personal
computers and laptops do not drive up growth of internet in India.

Let us
now have a look at the growth figures of internet users in India.
According to Internet and Mobile Association of India (IAMAI) and
IMRB International, “The Internet in India took more than a decade
to move from 10 million to 100 million and 3 years from 100 million
to 200 million. However, it took only a year to move from 200 to 300
million users.”

If we
look at the growth prospects, there are many surprises in store.
There were 213 million internet users in India by end of December
2013. In October 2014 there were 278 million internet users. This
figure is expected to grow to 302 million by end of this year and to
354 million by June 2015. This would mean that the internet users are
growing at 32%.

The
report says that India has the third-largest Internet user base in
the world at present. China leads with more than 600 million Internet
users, followed by the with estimated 279 million users and then by
India with 278 million users. This also means that by end of this
year, India will overtake the US as the second largest Internet
users’ base in the world.

How
this became possible, when sale of PC's and laptops is actually
declining in India? The simple fact is that internet is growing in
India on back of smartphones and tablets. According to some figures
published in Times of India, 2.66 million tablets were sold in 2012
and around 6 million in 2013. The 2014 sales figures are likely to be
much higher. Similarly smartphone sales are growing at a rate of
more than 200%, year on year basis. According to latest figures,
about 159 million users access the Internet on mobile devices in
India. This is estimated to touch 173 milllion by December 2014.

Many
would believe that internet users must be concentrated in the urban
areas only and rural areas may not have many takers. The situation
today does look something similar. In October 2014, out of 278
million users, as many as 177 million users were from urban centers
and growing at 29% rate. However in rural area, where there were 101
million users in October 2014, the growth rate is much higher at 39%.

I know
a lady who is an illiterate, yet uses a mobile phone effortlessly.
Once I asked her how she reads the contact list. She said that she
can identify a contact's number by looking at list and can identify
the correct name. I would not be surprised if in a short time from
now, she buys a smartphone and even starts accessing internet to see
photos and videos even when she can not read a thing.

The
internet growth figures in India are simply astounding. I am sure
that during next 2 or 3 years, we would have hundreds and hundreds of
new India specific Apps. Government wants to increase broadband
coverage to promote internet use. That is fine but what really would
drive more and more users to access internet are better 2G, 3G or
even 4G coverage at substantially reduced data tariff rates.